While I am normally a very empathic person, I find that I have little sympathy for most of the folks involved in this debacle. Both the people who took out loans for houses that they could not possibly afford and the lenders that gave the loans to them deserve whatever happens to them. Both sides in these transactions bet on the impossible: The idea that home prices would go up in a straight line forever. As you said, in many cases both sides of the deal were fraudulent.

I don't understand the whole premise of the mortgage industry anyway. The thirty and forty-year year mortgages are based on the promise that you will pay a certain amount each month over that time. When you sign such an agreement, you are making a promise that you don't have any way of knowing if you can live up to. The days of being able to work for a company for thirty or more years are over. You will have income disruptions, and sometimes they will be long ones. You also cannot promise that you will be healthy enough to earn an income over that length of time.

The mortgage writers know this, but they haven't cared. They were planning on selling the mortgage to someone like Fannie Mae or Freddie Mac within months anyway. Any problems that come up were going to be someone else's problem.

The real victims of this fraud are the taxpayers, who now have to bail out the mess created by these government sponsored boondoggles.